A federal judge has awarded over $334 million in a False Claims Act (FCA) lawsuit against a Medicaid health maintenance organization (HMO). The verdict amounts to one of the largest ever fraud judgments against a Medicaid contractor and the largest civil verdict in the history of the Illinois Attorney General's office.
Fraud scheme
From 2000-2004, the HMO received hundreds of millions of dollars to fund a Medicaid managed care plan to help low income pregnant women who had inadequate prenatal care. However, the HMO spent less than half of the funds it was paid by state and federal governments on providing health care.
In October 2006, the jury in the case found that the HMO illegally avoided providing care to pregnant women and others with expensive health conditions, while continuing to receive state and federal funds that were paid with the understanding that the HMO would not discriminate on the basis of health status or need for health services. As a result of these discriminatory practices, certain individuals were denied full access to health care coverage, and the federal and state governments overpaid the HMO by millions of dollars.
Judgment
As a penalty for the HMO's fraudulent conduct, the judge tripled the jury's original award of $48 million and assessed additional penalties totaling in excess of $190 million, for a total judgment amount of $334,365,000. The judgment was not excessive because (1) it was rationally related to evidence presented to the jury that the HMO engaged in discriminatory marketing practices and then repeatedly lied to the state Medicaid agency about these practices; and (2) it fell in the middle of the range of possible damage estimates presented, and closely lined up with the estimate espoused by the HMO's expert.
Under the federal FCA, the HMO was liable for three times the amount of damages sustained by the government, or $144 million. In addition to compensatory damages, the federal and state FCAs mandated the assessment of civil penalties against the HMO based on the number of false claims it submitted. There was sufficient evidence for the jury to find 18,130 false claims. Although the HMO's conduct undermined the Medicaid system's integrity and deprived certain women and unhealthy enrollees full access to health care coverage, the civil penalties, even if fixed at the minimum allowable amount, would grossly exceed any damages estimate. Accordingly, penalties were set at the minimum amount of the statutory range for each claim: $5,500 for each claim under the federal FCA and $5,000 for each claim under the state whistleblower statute.
SOURCE: U.S. ex rel. Tyson v. Amerigroup, Illinois, Inc., N.D. Ill., March 13, 2007; Illinois Attorney General Release, March 13, 2007.
For more information on this and related topics, consult the CCH® Medicare and Medicaid Guide.
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